ch 2 mindtap & quiz questions

Which of the following is a potential challenge for global sourcing?

-political problems -currency exchange -dealing with duties

primary goals of purchasing

1. Ensure uninterrupted flows of raw materials at the lowest total cost 2. Improve quality of the finished goods produced 3. Optimize customer satisfaction

Given the following information, find the break-even quantity using Break-even Analysis. Costs Make Option Buy Option Fixed Cost $100,000 $5,000 Variable Cost $12 $15

31,667 units

Forward vertical integration

Acquiring customers sony buying trucks to delover their finished goods inventories to their customers' warehouses

Which of the following is an advantage of decentralized purchasing departments?

Better knowledge of unit requirements

purchasing activities include

-Contract administration -Logistics considerations -Negotiations

Which of the following is an advantage to utilizing an e-procurement system?

-mobility -cost savings -time savings

Use the following information to determine which supplier is more cost-effective using total cost analysis. Note: Late delivery of components would cause 50% lost sales and 50% back orders of finished goods. Order lot size 500 Annual Requirements 6,000 units Weight per steering wheel 20 pounds Order processing cost $125 Inventory carrying rate 20% per year Cost of working capital 10% per year Profit margin 20% Price of finished golf cart $5,000 Back order cost $15 per unit Unit Price Supplier 1 Supplier 2 1 to 999 units/order $50 $49.50 1000 to 2,999 units/order $49 $48.50 Tooling cost $1000 $1000 Terms 2/10 net 30 1/10 net 30 Distance 120 miles 100 miles Supplier Quality Rating 2% 3% Supplier Delivery Rating 1% 2% Truckload (TL ≥ 40,000 lbs): $0.90 per ton-mile Truckload Less-than-truckload (LTL): $1.10 per ton-mile Note: per ton-mile = 2,000 lbs. per mile; number of days per year = 365

Using Supplier 1 will save about $32,000

break even analysis

a method of determining what sales volume must be reached before total revenue equals total costs

Backward vertical integration

acquiring sources of supply

A(n) ____________ purchase order is negotiated for repeated supply over a fixed time period, such as quarterly or yearly.

blanket

In 2016, ___________ was the leading market for U.S. exports.

canada

Making all the purchasing decisions, including order quantity, pricing policy, contracting, negotiations, and supplier selection and evaluation are the key characteristics of

centralized purchasing

Purchasing activities include all the following EXCEPT:

franchising services

Which of the following is NOT used to calculate total transportation cost when using the Total Cost of Ownership concept?

gas prices

More than a dozen presidential executive orders requiring federal purchasing officials to include environmental considerations and human health when making purchasing decisions can be attributed to a concept called:

green purchasing

A(n) _______________ performs transactions for a fee, and does not take title to the goods. Instead, title passes directly from the seller to the buyer.

import broker

Which of the following is NOT a reason for favoring multiple sourcing?

less quality variability

The purchasing and supply management function in the government and nonprofit sectors, such as educational institutions; hospitals; and federal, state, and local governments is called:

public procurement

traveling requisition

used for materials and standard parts that are requested on a recurring basis

One of the primary goals of purchasing is to:

Ensure uninterrupted flows of raw materials at the lowest total cost

Which of the following is NOT a factor to consider when selecting suppliers for important materials?

Number of customers with which the supplier currently has contracts

Petty cash is being phased out in favor of:

P-cards

Which of the following is a reason that single sourcing is considered risky/bad?

Poor supplier performance could result in plant shutdowns

If a firm manages to lower its purchase spend on materials by $10,000 then:

Profits before taxes increase by $10,000

The total cost of ownership for Supplier 1 is $1,670,000. The total cost of ownership for Supplier 2 is $1,750,000. The total cost of ownership for Supplier 3 is $1,690,000. Using Total Cost Analysis, it will be more cost-effective to use

Supplier 1

profit leverage effect

The measurement of impact of change in purchase spend on a firm profit before taxes, assuming gross sales and other expenses remain unchanged